TIS Announces Record Q3 Revenues of $10.7 million, an Increase of 35% YoY
Expects Return to Profitability in Q4
Top Image Systems, Ltd. (NASDAQ:TISA) today announced its financial results for the third quarter ended September 30, 2014. The quarter’s results include the impact of TIS’ July acquisition of eGistics, a leading U.S. provider of cloud-based payment and remittance record management solutions.
Third Quarter 2014 Highlights include:
- Record revenues of $10.7 million, an increase of 35% year over year;
- Adjusted EBITDA* loss of $1.5 million was impacted by one-time increase in costs related to changes made to the company’s accrual policy;
- GAAP operating loss was $4.7 million and included non-recurring expenses related to the acquisition of eGistics, PMI costs, debt reserve adjustment as well as to the legal fees related to the settlement of litigation with Mitek as well as to the impact of changes made to the company‘s accrual policies;
- Management anticipates return to profitability in Q4 with operating expenses ranging between $9.3 million to $9.7 million and expected Q4 revenues of between $10.5 million and $11.5 million;
- Recognized SaaS (Software as a Service) revenues of $2 million; total recurring revenues were $4.8 million;
- Mobile pipeline in the U.S. and worldwide more than doubled since the beginning of the year, driven by new sales opportunities;
- Development of a go-to-market strategy for innovative joint solutions based on the synergies and combined roadmap derived from the rapid, smooth consolidation of TIS and eGistics product development teams;
- Reinforced TIS presence in the U.S. financial mobile image processing market, marked by development of additional partnerships and participation in key industry events such as AFP, Money20/20 and FinovateFall;
- Received positive media coverage and industry analyst attention, including a write-up in American Banker’s Bank Technology News and mention in research published by IDC following TIS’ presentation of GlassCapture at FinovateFall;
- Obtained approval by the U.S. Patent and Trademark Office for TIS’ patent for technology for high-quality processing of documents of A4 or virtually any size and format.
Michael Schrader, CEO, Top Image Systems, commented, “Following the successful acquisition of eGistics early in Q3, TIS management led by our newly appointed COO and CFO Lyron Bentovim has focused on consolidation of the two companies, not only by initiating integration of products and solutions and by developing a joint long-term strategy and product roadmap, but also by combining operational teams, office sites and procedures to maximize efficiency and reach economies of scale. The closer we have examined the business of eGistics, the more confident we are that the acquisition will prove to be synergistic and highly accretive and further expand TIS’ business and value.”
Mr. Schrader added, “As we discussed on last quarter’s conference call, in Q3, TIS incurred significant one-time expenses related mostly to transaction expenses, PMI costs, and accrual policy changes as well as to the legal fees related to the settlement of litigation with Mitek. The company expects to return to a more normalized expense level and profitability in the fourth quarter and projects that revenues will range between $10.5 million and $11.5 million and expenses will range between $9.3 million to $9.7 million.”
Third Quarter 2014 Year over Year Results
Revenues: Total record revenues for the third quarter were $10.7 million, 35% growth over the $7.9 million achieved in the third quarter of 2013. License revenues for the third quarter were $5.8 million, compared to $4.2 million for the third quarter last year. Professional Services revenues for the third quarter were $4.9 million, compared to $1.7 million for the third quarter last year. Recurring revenues for the third quarter were $4.8 million, an increase of 140% on a year-over-year basis.
Gross Profit: Gross profit for the third quarter was $5.9 million, compared to $4.9 million for the third quarter of 2013, an increase of 20%. As a result of the one-time costs and adjustments, gross margin for the third quarter was 55%, compared to 62% in the third quarter last year.
Earnings: Adjusted EBITDA was a loss of $1.5 million compared to positive adjusted EBITDA of $1.2 million for the third quarter of 2013. Non-GAAP diluted loss per share was $0.10 compared to a gain of $ 0.08 for the third quarter of 2013. GAAP net loss was $4.8 million compared to GAAP net income of $1 million for the third quarter of 2013. GAAP diluted loss per share was $0.28 compared a $0.08 gain per share for the third quarter of 2013. 2014 results include the contributions from eGistics, but 2013 results do not include any eGistics results. We closed on the acquisition of eGistics in July 2014.